The Family $ Mission Statement


Instilling your children with the right financial values and a sense of responsibility is an important part of parentingâ€"and the affluent (this includes many physicians) have additional challenges.

“Almost everybody knows a family or has seen a case where the money hurt somebody in the family, or the kids or grandchildren blew it all.”—Rodney Zeeb

Instilling your children with the right financial values and a sense of responsibility is an important part of parenting—and the affluent (this includes many physicians) have additional challenges. Many parents want to make sure that a childhood spent in a wealthy household doesn’t leave their children with a sense of entitlement and a lax work ethic in addition to their sizable assets.

As it turns out, these parents are right to focus on values. A full 90% of affluent families will lose their wealth by the end of the third generation thanks to faulty money management, according to Rodney Zeeb, an estate planning attorney and co-author of Beating the Midas Curse. But a growing number of affluent elders have found some measure of security in their children’s futures by working with financial advisors to craft “family mission statements.”

These are basically formal documents outlining what is important to a family from a wealth perspective. The goal is to try to ensure that future generations inherit appropriate financial values along with the family fortune. And with the baby boomers set to transfer an estimated $41 trillion to the next generation over the next 40 years, according to the Center on Wealth and Philanthropy, the stakes have never been higher.

Many kids and adult children greatly anticipate their inheritances, though they lack the maturity to handle these funds properly. If they’re not adequately prepared, you’ve essentially got a time bomb waiting to go off.

Identifying Family Values

A family mission statement is actually the end result of a series of conversations among family members. Important topics of discussion include the family’s values and guiding principals, the meaning of relationships inside the family unit, and how the clan’s financial decisions—from annual income streams to charitable giving—should reflect that framework.

Typically, such conversations start with parents discussing their wealth-related values and goals with each other and with their advisor. Later on, other family members are brought into this dialogue to share their own thoughts about family and money.

Often, a family has a taboo about “money chats.” To break this, it’s vital to include multiple family members in the process. By doing so, the entire family can craft a shared mission statement, achieve consensus on it, and honor that document for years to come. Everyone needs to be a part of the process if values are to be adopted, internalized, and passed on. And the more you discuss money and values with your children while you’re alive, the more likely they are to share those values with their own kids.

Making the Right Statement

The family mission statement need not be long—often about three pages—but it should answer some key questions that shape a values-based approach to wealth. It should answer such questions as:

• What values do we hold?

• What goals do we want to achieve?

• What are the sources of our wealth?

• What are our attitudes toward work and sacrifice?

• What are our motivations for investment and estate planning?

• How do we want to be remembered as a family (what type of legacy do we want to leave)?

Addressing issues like these can be especially beneficial in preparing younger generations to handle inheritances properly. For example, when children see in writing that the wealth and comforts they currently enjoy resulted from the family’s hard work and effort, they may develop a greater appreciation of what it takes to create and maintain wealth. In the best-case scenario, this realization may inspire them to spend and save with more prudence and forethought.

Likewise, by spelling out any philanthropic causes and charities the family might wish to support over time, the children can see that the money they’ll receive has a larger purpose to do good—and therefore needs to be managed responsibly. That, in turn, can encourage them to learn about the various components of smart financial decision-making and become good lifelong stewards of their capital.

The kids typically ‘get it’ when it’s explained to them in this way. They start to see the importance of earning wealth, and they come to understand that the money is about more than just them—that they have a responsibility to it.

Values for a Lifetime

Once a family mission statement is drafted and agreed on by the family, it should be reviewed regularly—at annual family meetings, for example—to ensure that the document remains relevant to everyone’s goals and views. It makes sense to revisit the document after any major family event (marriage, birth, death, and so on). Such meetings can be combined with a retreat or vacation. It’s a great way to reconnect and visit with family members. In the process, you can build stronger bonds and values to pass down to future generations in the years and decades to come.

Talk to Your Financial Planner About:

• Techniques for broaching the subject of wealth and values with your children

• Setting up time for a family discussion with the planner in order to understand the need for a family mission statement

• Crafting a family mission statement to reflect your family’s values and traditions

Mr. Lowry, "The Business Owner's Advisor," has 25 years of experience specializing in advising and serving physician businesses. His fee-based financial planning and investment advisory practice is affiliated with Sagemark Consulting, a division of Lincoln Financial Advisors, a registered investment advisor. He helps doctors accumulate and transfer wealth in tax efficient ways through unique strategies that support their personal goals and family values. He welcomes questions or comments at or 888-921-8455.

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